When you’re advertising with Google AdWords, how much you bid on a keyword determines not just how much your ads will cost, but also how much exposure your ads will get. In this article, Using Google AdWords and AdSense author Michael Miller offers valuable bidding tips for minimizing your AdWords expenses while maximizing your exposure. It's imperative that you to come up with a bidding strategy that minimize your costs while maximizing your ad performance. There are a number of ways you can go and we'll examine each in this article.

From the author of

From the author of

Bidding on keywords is a key part of the process for Google AdWords and other pay-per-click (PPC) advertising. You pick the keywords that you want to trigger the display of your ad, and then determine how much you’ll pay when your ad is clicked. How much you bid affects both the success of your PPC ad campaign and how much money you spend in total.

Here’s why. If you bid too low, you won’t win enough keywords, your ads won’t appear as high or as often in Google’s search results, and you won’t generate much traffic back to your website. If, on the other hand, you bid too high, then you’ll end up overpaying for your ads, you’ll bust your budget, and you’ll end up with a very low return on your advertising investment.

This is why you need to come up with a bidding strategy that minimizes your costs while maximizing your ad performance. There are a number of ways you can go.

Strategy #1: Rely on Automated Bidding

Probably the simplest bidding approach is to let Google do it for you, via AdWords’ automatic bidding system. This works a little like an eBay auction, where you specify the maximum cost per click (CPC) you’re willing to pay, but then AdWords only bids as high as you need to pay to win the keyword. With this strategy, you typically end up paying much less than the maximum you specify.

So, for example, if you bid $2.00 for a keyword but the next-highest bid is $1.50, Google bids just enough more on your behalf to win the keyword. In this instance, that means an automatic bid of $1.51a big savings over the $2.00 you’d be willing to pay.

The automated bidding goes up only as high as you specify. In our example, if the next-highest bid is $1.99, Google bids a penny more on your behalf, or the $2.00 max you entered. If the next-highest bid is $2.01, however, Google ceases bidding on your behalf, as it will never exceed the maximum you specify.

The problem with relying on automated bidding is that you have little or no ability to bid an exact amountwhich you often need to do to ensure specific placement. Automated bidding plays off what your competitors are bidding, which essentially puts them in the driver’s seat, not you. So if you need to bid an exact amount, regardless of what your competitors are bidding, you need to turn off automatic bidding and go with manual biddingand then adhere to one of the following strategies.